Kodak Last-Gasp Hope: KodakCoin

Final preparations being made to the Kodak stand at CES, the electronics trade show held this week in Las Vegas.CreditCreditDavid Mcnew/Agence France-Presse — Getty Images

By Tom Buerkle

Jan. 9, 2018

What do you get when you cross the feverish world of cryptocurrencies and a faded industrial giant desperate for a new lease on life? The answer, provided Tuesday by Eastman Kodak, is KodakCoin.

Kodak filed for bankruptcy protection in 2012 after fumbling the shift to digital images. Now, the company is betting its future on digital currencies with an initial coin offering intended to help photographers sell their work. The announcement more than doubled Kodak’s stock, but it’s unlikely to do anything like the same to the company’s sales or profit.

Kodak, based in Rochester, N.Y., emerged from bankruptcy in 2013, relieved of much of its debts and patents. It refocused around digital printing, packaging and a legacy film business that’s a shadow of the glory days when Paul Simon had a hit song rhapsodizing about Kodachrome. None of those has caught on. Sales fell by a third in the first three years after bankruptcy. They dropped another 8 percent in the first three quarters of 2017, to $1.1 billion, and the bottom line dipped into the red. The company’s market capitalization, nearly $30 billion at its peak in the late 1990s, fell to just $135 million early this week.

The announcement of the planned blockchain platform and initial coin offering changed the stock’s trajectory. Kodak is just the latest to see the potential halo effect of cryptocurrencies after Bitcoin soared some 14-fold in 2017. In December, shares of the tiny Long Island Iced Tea tripled after it renamed itself Long Blockchain.

Start-ups raised more than $3 billion with initial coin offerings last year, led by Filecoin, a blockchain data-storage network that raked in $257 million. Yet the field is growing crowded. ICO Alert lists roughly 80 offerings in the market and a similar number planned in the next two months.

Jeffrey J. Clarke, Kodak’s chief executive, will take whatever he can get. The company has been looking for assets to sell to pay down some of its $845 million in debt, according to Eikon data. A blockchain platform could give photographers a better way to license their images and receive payment. But it’s hard to see how that will reverse Kodak’s decades-long decline.

Tom Buerkle is associate editor of Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.